This case study is based on genuine client work carried out by our practice. Names, figures and identifying details have been changed to protect confidentiality, and the numbers shown are representative of the situation rather than the exact amounts. Your own position will differ.
The scenario
A restaurant takes money through a till, two card machines, a delivery platform and occasional cash. The bookkeeping happens by looking at what hit the bank. Nobody reconciles the till Z reading to the banking.
The owner has a nagging sense the numbers do not quite work but no way to prove it either way.
Why hospitality is genuinely harder
The gap between a sale and the money arriving is where everything goes wrong.
Card settlements arrive net of fees, days later, and batched. One deposit may cover several days. Match the deposit to the day and both are wrong.
Delivery platforms take substantial commission and pay net, weekly. Your turnover is the full price the customer paid, not the payout. The commission is an expense. Declaring only the payout understates turnover, which matters for the VAT threshold and does not match what the platform reports.
Tips and service charge have their own treatment, and it depends on how they are distributed and who controls them. Getting this wrong creates a PAYE and National Insurance problem, not just a VAT one.
Cash. Any business taking cash attracts more attention, and the only defence is a reconciliation that actually ties out.
The VAT complication nobody enjoys
Hospitality has genuinely fiddly VAT. Eat in is standard rated. Hot takeaway food is standard rated. Cold takeaway food is often zero rated. The same sandwich can carry different VAT depending on whether it is heated and where it is eaten.
If your till is not set up to split those correctly, every VAT return you file is wrong, in a way that compounds quarter after quarter and is very hard to unpick later.
The approach we would take
Reconcile daily takings to the till Z reading to the banking. Every day. If they do not agree, find out why that day, not in six months when nobody remembers.
Get the till categories right first, because everything downstream depends on them.
Account for the delivery platforms gross, with commission as an expense.
Deal with tips deliberately rather than informally.
The point of this example
In hospitality the reconciliation is the accounting. Margins are thin and volumes are high, so a small percentage lost in an unreconciled gap is a large share of profit. The owner nagging sense that the numbers do not work is usually correct, and the reconciliation is the only thing that turns that feeling into information.
If you run a restaurant or takeaway and your takings have never properly tied to your banking, get in touch.
Struggling to reconcile takings?
We set up a system that captures every income channel, reconciles it to the bank, and gives you accurate VAT, clean accounts and a true profit figure.